What is the value of a life estate?

On: By: Bill Gatesman

A technical notice for Maryland elder law professionals.

When a homeowner executes a deed retaining for himself a life estate, such action will be considered a transfer of resources for Medicaid eligibility purposes. However, the homeowner has not given away the entire property. What the homeowner has given away is a remainder interest, that is, the right to own the property after the homeowner dies.

The value of the transferred remainder interest depends on the age of the homeowner who retains the life estate. Maryland uses a table, Schedule MA-7, to assign value both to the transferred remainder interest and to the retained life estate. You may view that table by clicking here: Life Estate and Remainder Interest Table.

My spouse needs nursing home care; Can I keep all of our money?

On: By: Bill Gatesman

Medicaid law allows an individual whose spouse needs nursing home care to keep as much as $101,640 in 2007, as well as the house, a car, certain life insurance policies and a few other assets. But this rule is misleading. Consider the following example.

Husband and Wife own a house, a car, and $100,000 in investment assets. Suppose that Husband needs to go to a nursing home. One would think he could get Medicaid immediately because there is only $100,000. However, the rule says that the spouse in the community can keep half of the total assets (the house and car are exempt and not included in this computation) but not more than the maximum amount, or $101,640.

In other words, in this example, Medicaid will not pay the nursing home costs until the couple has spent $50,000 because Wife is allowed to keep only half of the $100,000 they had when Husband entered the nursing home.

Is this the end of the story, or can Wife do something to enable her to keep the whole $100,000?

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Fed up with complicated legal language?

On: By: Bill Gatesman

“Whereas, Wherefore, Where art thou?” Did you ever wonder why lawyers use such archaic language in their legal documents? One reason is that lawyers like to stick with tried and true methods. Another reason legal documents tend to be so complex is that lawyers want to be sure to cover all the bases, so they write paragraphs full of synonyms for the same descriptive term just in case one of the synonyms has a slightly different shade of meaning to ensure that the legal document will be effective in all relevant circumstances. But is this really necessary?

The Gatesman Law Office has undertaken the task of simplifying our legal documents. However, we must exercise great care to ensure that our more simple language does not result in a document that fails to cover all the bases. After careful review, we have created a five page, easy to understand Will to accomplish sophisticated estate tax planning that replaces our more archaic fifteen page document.

While there has been a movement in the legal profession that supports the use of “plain language” documents, it does not appear to have caught on with most lawyers. We are doing our best to promote the plain language ideal to simplify matters for our clients.

Does everybody need a revocable trust?

On: By: Bill Gatesman

Many of you have heard the clarion call – “You need a revocable trust!” This cry emanates from the full page newspaper ads touting the one-day seminars on revocable trusts. This cry emanates from the 60-second spots on the radio informing you that your estate plan is not complete without a living trust. Such marketing tactics might lead one to believe that everyone should use a revocable trust. But is it a good idea for you?

While revocable trusts can be good estate planning tools, they are not for everyone. Any advertisement that implies this is misleading. Indeed, by using a revocable trust, seniors can lock themselves out of a powerful asset preservation strategy. Before reviewing that strategy, however, lets take a closer look at revocable trusts.

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Using Fiction to Obtain Medicaid Eligibility

On: By: Bill Gatesman

A technical article for Maryland elder law professionals.

Another lawyer called recently and asked me how to resolve a problem faced by one of his clients. When I told him what to do, he remarked: “You’re making that up!” He was right about my “making that up” because my solution involved employing a fiction to obtain the desired result.

There are two ways an asset preservation planner may use fiction to help a client to qualify for Medicaid benefits. The first is getting a court order nunc pro tunc, and the second is to use a special power of attorney.

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Gifts by Spouse Cause Medicaid Ineligibility

On: By: Bill Gatesman

A technical notice for consumers and Maryland elder law professionals.

In a dramatic shift in Medicaid policy, Maryland now will look at asset transfers by a spouse living in the community to determine whether the spouse in the nursing home may continue to receive Medicaid benefits. Previously, once Medicaid eligibility was granted, the community spouse could make gifts of assets or create a life estate deed with no adverse consequence to the spouse in the nursing home. Now, however, the Maryland Medicaid authorities state that such actions by the community spouse will cause the spouse in the nursing home to lose Medicaid benefits. Click the Contact Us link at the top of the page if you would like to learn more about this recent development in the law.

Intense Scrutiny for Third Party Trusts

On: By: Bill Gatesman

A technical article for Maryland elder law professionals.

Elder law lawyers are familiar with third party trusts authorized by the Omnibus Budget Reconciliation Act of 1993 (OBRA ’93), which third party trusts are addressed in 42 U.S.C. 1396p(c)(2)(B). With such a trust an individual can set aside assets for a disabled person under age 65 and not cause such disabled beneficiary to lose Supplemental Security Income (SSI) or Medicaid benefits. Moreover, the person who creates and funds the trust will not become ineligible to receive such benefits as a consequence of funding the trust.

The Gatesman Law Office now is negotiating with the Maryland Medicaid authority over Maryland’s imposition of strict requirements not found in the law allowing the use of such trusts. In particular, for a so-called c2B trust, Maryland will require the following:

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Power of Attorney and Advance Directive

On: By: Bill Gatesman

Like the shoemaker whose children run around barefoot, there are lawyers who have no estate plan. Even more numerous are non-lawyers who have never done any estate planning. Some folks might reason that such planning is unnecessary because they don’t have vast wealth or that all of their wealth is tied up in retirement assets that will pass to their named beneficiaries. While it is true that such people may not require sophisticated estate planning, all adults would be prudent to ensure that appropriate personal and financial decisions will be made for them should they lose the ability to make such decisions themselves. There are several basic estate planning documents that enable people to appoint trusted individuals to make such decisions on their behalf.

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Maryland Changes its Medicaid Rules

On: By: Bill Gatesman

Maryland has issued new regulations making significant changes to Medicaid law. These changes affect many individuals who have done Medicaid planning in the past. This article will discuss the changes and show how they might affect you. Because these new rules drastically alter the assumptions that underlay all previously considered plans, prudence suggests that all existing asset preservation plans be reconsidered. These new regulations deal with Federal rule changes and many of the points discussed below will apply in D.C. and other States as well. This office has been working to develop strategies to address these new rules. Continue reading “Maryland Changes its Medicaid Rules” →